Malladi Drug buys US-based Novus Chem

The Chennai-based Malladi Drugs and Pharmaceuticals, the country's largest ephedrine and psedoephedrine salts makers, has acquired an American psedoephedrine firm Novus Fine Chemicals.

Managing director Prashant Malladi said the acquisition along with the capital expenditure for both the companies would cost around Rs 100 crore.

He declined to provide details of the acquisition cost and capital expenditure. He said this was the first acquisition of an Indian company in the cough and cold segment of the US.

The closely-held company will mobilise funds from its existing private equity partners ICICI Venture, ILF&S and Life Sciences Opportunity Fund of Sanders Morris Harris group.

ICICI Venture will bring in Rs 50 crore and the remaining part will be equally shared by ILF&S and Life Sciences Opportunity Fund.

In a deal structured by DSP Myrrill Lynch, Maladi "has entered into a definite agreement with the three private equity partners for infusion of funds through the issue of common stock," Malladi said.

The acquisition strengthens the Rs 80 crore Malladi's position in high growth phenylepherine segment in the US as Novus is the only player in the American market.

With this acquisition, Malladi will get a manufacturing facility in the US which will help it accelerate its growth in contract manufacturing business.

The Novus -Malladi combine is expected to post a sales of Rs 200 crore by the end of next year, he said.

Novus Fine is owned by Joseph V Fusco and Amol Kulkarni. It has an installed capacity of 300 tonne of pseudo ephedrine.